[OFFICIAL ENGLISH TRANSLATION]
Date: 19980923
Docket: 97-2392(IT)I
BETWEEN:
LOUISE BLAIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
___________________________________________________________________
Agent for the Appellant: Bernard Brosseau, C.A.
Counsel for the Respondent: Valérie
Tardif
___________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally on July 2, 1998,
at Sherbrooke, Quebec.)
Archambault, J.T.C.C.
[1] Louise Blais disputes
assessments made under the Income Tax Act
(Act) by the Minister of National Revenue
(Minister) for the 1993 and 1994 taxation years.
[2] To Ms. Blais's employment
income, the Minister added additional amounts of $918 for 1993
and $4,785 for 1994 in respect of tips. Those tips allegedly came
from the work she had done at a restaurant
(Chez Ronnie). Ms. Blais contends that her tips
should be limited to $102 for 1993 and $2,214 for 1994.
The Facts
[3] In making his assessment, the
Minister assumed certain facts which he stated in
paragraph 5 of the reply to the notice of appeal. The said
paragraph 5 reads as follows:
[TRANSLATION]
(a) during the years in issue, the appellant was
employed, inter alia, by Société Chez Ronnie
Bar Restaurant Inc. (hereinafter the
"Corporation");
(b) during the years in issue, the appellant was a
waitress assigned to serve meals at the Corporation's
restaurant;
(c) during the years in issue, the appellant received a
basic salary and tips from the Corporation;
(d) T4 slips showing amounts of $793 for the 1993
taxation year and $4,298 for the 1994 taxation year were issued
to the appellant by the Corporation;
(e) the appellant reported the following income in her
tax returns for 1993 and 1994:
1993
1994
Base salary:
Jeans Flo-Rican
Inc.
$9,204
$3,491
Bar le
Shooter
$ 845
Chez Ronnie Bar Restaurant
Inc.
$
793
$4,298
Auberge
Royale
$ 309
Tips:
$
0
$ 343
Unemployment insurance
benefits
$ 530
(f) the following computation method was used to
establish the total amount of tips received by the appellant in
her employment with Chez Ronnie Bar Restaurant Inc. for each of
the taxation years 1993 and 1994:
(A/B)X(CXD)
where:
A is the
appellant's gross annual salary;
B is the
gross annual salary of all the waitresses assigned to serve meals
at the restaurant;
C is the
restaurant's after-tax sales;
D is the
average percentage of tips paid to the waitresses on sales at the
Corporation's restaurant;
(g) the appellant's gross annual salary at the
Corporation was $793 for the 1993 taxation year and $4,606 for
the 1994 taxation year;
(h) the gross annual salary of all the waitresses
assigned to serve meals at the Corporation's restaurant was
$51,092 for the 1993 taxation year and $44,794 for the 1994
taxation year;
(i) the restaurant's total after-tax sales
amounted to $526,244 for the 1993 taxation year and $443,766 for
the 1994 taxation year;
(j) the average percentage of tips paid to the
waitresses on sales at the Corporation's restaurant was
estimated at 11.24 percent for each of 1993 and 1994;
(k) the total amount of tips received by the appellant
was established at $918 for the 1993 taxation year and $5,129 for
the 1994 taxation year;
(l) consequently, unreported tip amounts of $918
for the 1993 taxation year and $4,785 for the 1994 taxation year
were added to the appellant's income.
[4] Ms. Blais admitted all of
these facts except those stated subparagraphs 5(f) and (h)
to (l). The evidence she adduced did not contradict the facts
that she did not admit.
[5] Before starting to work for Chez
Ronnie, she had worked for approximately two months in 1993
at the Bar le Shooter where, she admitted, she earned from $35 to
$50 in tips each evening.
[6] In 1993 and 1994, Chez Ronnie was
a business operating a discotheque, a dining room and a bar. That
business paid two types of remuneration: the workers who were
waiters in the dining room or in the bar received an hourly wage
of $5.13 as well as tips, while those who received few or no
tips, such as the cloakroom attendants, were paid a higher hourly
wage of $5.85.
[7] Chez Ronnie's workers were
paid by cheque every other Thursday. A cheque stub was given for
each type of remuneration, even if a worker was entitled to both
types of remuneration for the same pay period.
[8] Ms. Blais began working for
Chez Ronnie on October 17, 1993. Her testimony was quite
evasive as to the type of services she had rendered during the
two relevant taxation years. However, an examination of her
cheque stubs provides us with the following information: she
received an hourly wage of $5.13 during her first two weeks
and $5.85 for the following eight weeks. It may therefore be
assumed that she first worked as a waitress and then as a
cloakroom attendant.
[9] Starting on December 26,
1993, in a single pay period, she worked as both a cloakroom
attendant and a bar waitress. She described herself as a
"shooter girl", which was the expression used in her
milieu. She generally worked in this capacity for three or
four hours on Fridays, when the bar was busiest. Her work as
a cloakroom attendant was for approximately 10 hours a week,
usually over two or three days.
[10] Starting on May 15, 1994, she
spent most of her time as a waitress in the dining room. However,
she also worked as a cloakroom attendant for approximately
five hours a week in the last two weeks of May and
about two and a half hours a week in June. She occasionally
worked as a bar waitress.
[11] In her testimony, Ms. Blais said
that she had marked down on the back of her cheque stubs the
amount of tips she had earned during the two workweeks covered by
those stubs. The amounts represent the total of all daily tips
she had earned and had recorded on the back of her order
books.
[12] Ms. Blais left her job with Chez
Ronnie on October 1, 1994. Chez Ronnie had given the Auberge
Royale a concession to operate the dining room. It appears that
Ms. Blais worked for the new business for a short period of
time.
Analysis
[13] As the Minister made his assessment
within the normal time period, the burden is on Ms. Blais to
show that the facts assumed by the Minister are incorrect, which
burden, in this instance, consists mainly in establishing that
the amounts of income from tips were lower than those stated by
the Minister in his notices of assessment.
[14] Unfortunately for Ms. Blais, I do
not believe that she successfully discharged that onus. I must
say in general that I found her testimony quite evasive,
particularly as regards the terms and conditions of her
employment: the start, duration and end of her employment, the
description of her duties, the amount of her tips and the number
of tables to be waited on. She was also rather evasive about the
circumstances of the signing of her tax returns for 1993 and
1994.
[15] In her 1993 return, she included no
tips, whereas $102 in tips are indicated on the back of her
cheque stubs. In her 1994 return, only an amount of $343 is
reported in respect of tips, whereas the amounts indicated on the
back of her cheque stubs come to at least $2,253.
[16] Furthermore, some of
Ms. Blais's statements were contradicted by evidence
brought before the Court. Ms. Blais claimed that she had
earned no tips as a cloakroom attendant. It is true that the
cheque stubs relating to the remuneration received by her as a
cloakroom attendant for 1993 show no tips. However, all the
cheque stubs for 1994 having reference to the remuneration
received in that capacity show tips earned by Ms. Blais.
[17] Of her 40 weeks of employment with
Chez Ronnie in 1994, Ms. Blais worked approximately
24¾that is, 12 pay periods¾as both a cloakroom
attendant and a waitress. On examining the cheque stubs for those
12 pay periods, it may be seen that most[1] of the stubs relating to the
remuneration paid for the work as a cloakroom attendant showed
tips which, calculated on an hourly basis, are greater than the
tips paid to Ms. Blais when she worked as a waitress in the
dining room.
[18] Furthermore, Ms. Blais's
testimony was contradicted by that of the former owner of Chez
Ronnie, who stated that the cloakroom attendants could share the
tips left on a small plate near the cloakroom.
[19] Thus Ms. Blais's argument that
the Minister attributed tips to her for work periods during which
she was working as a cloakroom attendant and had no opportunity
to receive tips is not valid. Even if that argument were accepted
for 1993, the additional income of $918 could relate to tips that
Ms. Blais earned at the Bar le Shooter and that she did not
report. As she herself admitted, she earned between $35 and $50
in tips each evening at that establishment. It is therefore
reasonable to conclude that Ms. Blais earned at least $918
in tips in 1993.
[20] Here is how I arrive at that figure.
Ms. Blais earned remuneration of $845 from the Bar le
Shooter. At an hourly rate of $5.13, that represents
164 hours which gives, if one assumes a seven-hour workday,
23 days of work. Using the minimum daily amount of tips that
she admits she received, namely $35, one arrives at tips of $823
for her work at the Bar le Shooter. If I add only the amount of
tips which she admitted receiving from Chez Ronnie in 1993, that
is, $102, the result is a total of $925 in tips for 1993.
[21] It is quite clear that, if one
considered the fact that the appellant worked as a waitress
during her first two weeks of employment at Chez Ronnie, it
could be supposed that the amount of tips from that establishment
was much greater than $102.
[22] Moreover, I found Ms. Blais's
testimony neither convincing nor credible as to the amounts of
tips she had indicated on her cheque stubs. On the contrary, the
evidence shows that Ms. Blais did not report her income from
tips. She admitted that she had earned tips of $35 to $50 an
evening when she worked as a bar waitress or "shooter
girl", whereas her stubs show, on average, only about $10 or
$12 per evening. At $12 per evening, assuming a tip of $0.50 per
drink, she would have served only 24 drinks in a period of
roughly three hours between 11:00 p.m. and
2:00 a.m. That strikes me as unrealistic. Tips totalling $50
represent a $0.50 tip per drink for 100 drinks, which I find
more reasonable for a weekend evening, during the hours when the
bar was busiest.
[23] The appellant did not report tips for
either of her waitress jobs in 1993, that is to say, for her work
at the Bar le Shooter and at Chez Ronnie. Furthermore, she did
not report tips from her work at the Auberge Royale in 1994.
[24] I find the estimate by the
Minister's auditor entirely reasonable. To determine the
amount of tips to be attributed to Ms. Blais, the auditor
considered only sales related to the operation of the dining room
and did not include sales of alcoholic beverages. He assumed that
Ms. Blais had been hired solely as a waitress in the dining
room. In addition, the auditor did not try to estimate the amount
of tips from the Bar le Shooter or from the Auberge Royale. Yet,
the evidence showed that Ms. Blais had worked as a bar
waitress from December 26, 1993, to May 15, 1994. The
auditor could therefore have attributed to her an even larger
amount of tips.
[25] Mr. Dumontais admitted that the
rate of 11.24 percent for tips used by the Minister's
auditor seemed reasonable to him for the dining room's sales
and said that it was even low when it came to sales at the
bar.
[26] There is no evidence that this
evaluation is unreasonable. Moreover, Ms. Blais's agent
did not dispute the percentage used by the auditor or the
proportion of sales that was attributed to Ms. Blais. His
only real argument was that part of the work related to duties
that did not entitle the appellant to tips. However, as mentioned
above, that argument is not support by the facts adduced in
evidence.
[27] For all these reasons,
Ms. Blais's appeals for the 1993 and 1994 taxation years
are dismissed, without costs.
Signed at Ottawa, Canada, this 23rd day of September 1998.
J.T.C.C.
Translation certified true
on this 30th day of June 2003.
Erich Klein, Revisor
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